Hbj Says Plan Was Aimed Only At Maxwell

July 21, 1987|By Susan G. Strother of The Sentinel Staff

NEW YORK — A director of Harcourt Brace Jovanovich Inc. testified Monday that HBJ's directors were told that the recapitalization plan they adopted would not protect the publisher against future takeover attempts.

J. William Brandner, an executive vice president and director of HBJ, testified that First Boston Corp., HBJ's banker, had said the recapitalization plan was a specific solution to the problem presented by British publisher Robert Maxwell, who made an unsolicited bid for the Orlando company.

Brandner's statements came in the third and final day of testimony in Maxwell's suit against HBJ and First Boston. Maxwell, chairman of British Printing & Communication Corp., has contended that HBJ's recapitalization improperly locks out potential suitors because it places large blocks of stock in the hands of investors aligned with HBJ's management.

Maxwell contends that the $3 billion takeover defense is illegal on various grounds and has asked the court for both a preliminary and a permanent injunction to stop the plan. If the recapitalization is blocked, so, too, would be the dividend, valued at $55 to $60 a share, on which the plan hinges. U.S. Judge John F. Keenan is expected to rule on the issue before Monday, when the dividend is to be issued.

Sheldon Raab, HBJ's lawyer, asked whether, ''in all the deliberations of the board, was there any discussion to the effect that the recapitalization was going to prevent a takeover of the company'' by anyone but Maxwell.

''No,'' Brandner replied, ''and in fact the discussion was to the contrary.'' He said the board was told that ''the recapitalization was only a provision for the present. If other parties wanted to make an offer for a higher value, there was nothing to stop them.''

Restating a point made by an earlier witness, Brandner said there was no agreement between HBJ and First Boston on how the bank would vote 40,000 shares of HBJ preferred stock it owns. First Boston purchased the stock as a condition of providing some of the financing associated with the recapitalization. HBJ has the option to repurchase the stock at a later date. Under the recapitalization, First Boston, HBJ's management and its employee stock ownership plan would control at least 40 percent of HBJ's stock.

''Did you ever hear anybody say that First Boston and the ESOP would vote together?'' Raab asked.

''There was no reference to voting as a block,'' Brandner answered, later adding that ''First Boston said it would exercise its vote and vote its shares as an investor.''

Maxwell's suit contends that the stock purchase associated with First Boston's loan was a means for HBJ to transfer a large block of votes to a friendly investor.